Books

[megamuel]

A lot of people on here say that people selling systems can't trade so they sell systems to make their money. Could the same be said for authors? I mean why write a book if you are a successful trader? I am sure there are successful traders that have written books but what is their motive for doing so? If they already have a means to make money and they are good at that then why turn to writting?

Sam.

 

[montmorencyt2w]

An interesting question, and I'd think it is for a whole variety of motives. Some of them may have a genuine philanthropical wish to spread the knowledge and wealth around.

I doubt if any of them expect to make any money out of the book, although there will be the occasional bestseller.

It could be ego, or a wish for recognition by their peers or a wider public, or some sort of "academic" respectability.

Perhaps some of them simply can't think of anything else to do, and others may simply write for the pleasure of writing.

 

[megamuel]

Thanks for your thoughts. It crossed my mind yesterday as I was reading my latest trading book (Integrated Pitchfork Analysis - yes its as boring as it sounds!) and I thought, if these methods are so good then why does the guy need to write a book, in fact, why does anyone need to write a book??? Unless its for as you say, for recognition and academic respectability. I genuinly think thats what this guy is doing, I think he wants to be the next big name in the field of technical analysis! But I could be wrong....

 

[b4gt]

My belief is that trading is on it's own a risky business (for the trader that is). So why they don't add another stream of income? I think some of the people whose books I read either sell stuff related to trading (i.e. books or software) or sell seminars and coaching.

So the books they write work in two ways for them:
1. they bring money of their own
2. they work as a showcase for their business.
And all that without having to worry about the ups and downs of the market.

Edit: I am not saying that they write things that they haven't tried on their own money. I am saying that the extra money are more than welcome for everyone 🙂

 

[montmorencyt2w]

Good point b4gt. I can think of one author who gives infrequent but rather expensive lectures, advertising that what's in the lecture/seminar isn't in any of his books. (Reasonable enough | suppose). I think he also does private consultancy, which is perhaps where his real steady income stream comes from.

Mega: So, what do you think of the pitchfork then? I know very little about it, and have never used it, but Marcel Link mentions it in passing in his best-known book. Of course these old pros know all the patterns, and probably used them almost unconsciously half the time, while us apprentice traders have to work at it laboriously.

Just been catching up with your trading log. I like your open, honest style, and hope you are able to start updating it again soon. I know you will have read loads by now, but one thing that almost everyone seems to agree on is to make sure you look at a whole range of timeframes, whatever your trading style. Get the bigger picture, as well as the smaller one. Ideally, a trade should line up in all the timeframes you are considering.

Another thing that is common, and Link emphasises, is to "preserve precious capital". Make sure you don't lose too much, and the winnings will take care of themselves. He also says that it takes from 2-5 years or more to become a decent trader, and for the first two years, chances are you will lose money. But at least by keeping losses to a minimum, you will stay in the game long enough to learn the trade. Like yourself, I have opted out of active real-money trading for a while (done it several times now actually), to just step back and try to reassess what I'm trying to do and where I'm going.

 

[megamuel]

Good points b4gt, so basically you think its just the trader being entrepreneurial and having another, more steady form of income. Would make sense.

Mont, I definately think there is something in using pitchforks, and the thing that appeals to me about trading using lines is that you have a clearly defined entry point and its easy to work out stops and targets. I.e. buy on or around the line, stop loss just on the other side of the line, and target is the next line if you get me? I'm about half way through the book and its taking a while because I swear this guy is the Stephen Hawking of the technical analysis world and its pretty hard for a mere mortal like me to grasp some of the concepts. Sometimes it feels like he just keeps adding lines on the charts until something fits! But generally some of the principals seem to work really well.

Thanks for your kind words about my trading journal. I regret that I am not regulary updating it but truth be told, I HATE loosing money! Mainly because I don't have much and the small amount I do have took me ages to save! I traded with it for a while, made some and lost some but I proved to myself that I don't yet have an 'edge'. So I have banned myself from trading while I educate myself some more. I don't know if its good or bad thing for a trader to hate loosing money. I suppose losses are part of the game! Anyway, once I've finished this book I'll start posting some analysis and trades using pitchforks on my journal and see how I get on.

Good point about the time frames. Just downloaded meta trader 4 and been having a play around with pitchforks on that. Its great you can look at the daily bars and draw a pitchfork with the pivots, then move to 4 hr charts and draw a pitchfork within the daily pitchfork etc. and wait until they match up. Err.... Kinda hard to explain... Keep an eye on my journal anyway!

I'm definately with you on the 'preserve precious capital'! Thats exactly what I am doing. Although, I have to confess I broke my ban a couple of times and made some trades... Lost money as well which made me feel like a silly boy! So how is your trading going? What methods are you using/learning?

Sam.

 

[montmorencyt2w]

Sam,

"Hate losing money" is fine I think; keep that attitude and you may beat the pants off half of us at this game before many years. Take some losing trades, sure, but keep them small; but I'm sure you've read that many times.

MT4 is pretty cool.

I'll check out the "Stephen Hawking of the TA world" one of these days 🙂

Currently not actively trading for the reasons I mentioned, although I've just opened a new SB account with IIS (after the information about their "free money" offer was mentioned on here, and will use their "trading academy" to trade small stakes for a while. Trouble is those low-stake opportunities usually don't last very long (not actually verified this one), so you have to make hay while the sun shines.

I'm currently studying and re-studying Trader_Dante's method, and that's going to be my main approach for a good while I think. I did look at it briefly when I first signed up here last year, but I didn't follow it through properly then; wish I had done 🙂 Of course, it's not the only way to make money (as he himself says). There is lots of good information and great people on this forum. Takes a while to fully appreciate it all. I will also try to incorporate some lessons from Marcel Link as well, I think, although he is more indicator-based. However, I imagine he would not disagree with any of TD's approach to chart analysis.

I've slowly realised I can't get rich quickly 🙂 so I'm now in for the long haul.

I initially started inspired by Mark Shipman's book about commodity trading. However, this was in a highly trending market, and you barely needed any serious TA in order to profit. Times change 🙂
More recently, I've been inspired by Barry Burns and his "Top Dog Trader" stuff (bought some of it). Lot of good stuff in that I think, but I'm not sure I was using it right; didn't always work for me, anyway. Anyway, I decided to look elsewhere, and that's when I realised what a jewel TD's stuff was.
I may ending up finding that doesn't work for me either; it's not the system, but the person trading it. You've probably read that a few times also 🙂

 

[N Rothschild]

i think people write books for the simple fact they enjoy educating others. not everything has to have a financial motive

 

[Rossini]

Reading wont give you an edge.

Thanks for your kind words about my trading journal. I regret that I am not regulary updating it but truth be told, I HATE loosing money! Mainly because I don't have much and the small amount I do have took me ages to save! I traded with it for a while, made some and lost some but I proved to myself that I don't yet have an 'edge'. So I have banned myself from trading while I educate myself some more. I don't know if its good or bad thing for a trader to hate loosing money. I suppose losses are part of the game! Anyway, once I've finished this book I'll start posting some analysis and trades using pitchforks on my journal and see how I get on.
.

HI Sam, regarding your comment above, I don’t think there is any way to learn to trade without losing money. I understand where you are coming from and think it wise that you are not just jumping into the market every day without a plan. However a trading edge can only come from experience. And the experience comes through trading.

If I were you I would read 'trading in the zone', it’s a fantastic book and a must read. There are loads of methods out there to be used. Now I’m not saying that any method works or doesn’t work (I feel that the trader makes the method work and not the other way around) but a half decent strat should keep you around breakeven if you stick to it long enough, and this will give you some valuable experience that no book can teach you!

I seem to remember that you have about £2K in your SB account? Can you not ask the SB company to let you trade at 10-50p per point? That way in the worst case scenario you could lose 2000 points in a row (which is so unlikely) and still have halve your account. Loses are fine, they are as much a part of trading as profits, as long as you learn something from them. You have to be in the market to find out what you like doing and what you don’t like doing.

I’m sure you have already thought of this as you seem switched on but maybe it can be of some help?

Rossini

 

[WallStreetHero]

i doubt they are looking for extra revenue, surly warren buffet and jim rogers didnt think that writting books would double there fortune, its just another way of getting your name in the market and getting some fame, same reason why traders will love to be interviewes on cnbc or bloomberg even if its for free, they will just come on for 2 minutes to tell the world to buy a stock they love or one they hate.

books dnt make you that much money either, most will not even sell a 1000 copies.

 

[Black Swan]

HI Sam, regarding your comment above, I don’t think there is any way to learn to trade without losing money. I understand where you are coming from and think it wise that you are not just jumping into the market every day without a plan. However a trading edge can only come from experience. And the experience comes through trading.

If I were you I would read 'trading in the zone', it’s a fantastic book and a must read. There are loads of methods out there to be used. Now I’m not saying that any method works or doesn’t work (I feel that the trader makes the method work and not the other way around) but a half decent strat should keep you around breakeven if you stick to it long enough, and this will give you some valuable experience that no book can teach you!

I seem to remember that you have about £2K in your SB account? Can you not ask the SB company to let you trade at 10-50p per point? That way in the worst case scenario you could lose 2000 points in a row (which is so unlikely) and still have halve your account. Loses are fine, they are as much a part of trading as profits, as long as you learn something from them. You have to be in the market to find out what you like doing and what you don’t like doing.

I’m sure you have already thought of this as you seem switched on but maybe it can be of some help?

Rossini

Good post 🙂

 

[montmorencyt2w]

Mega,

Sorry, let me correct my earlier reference to "IIS". Should have been "III" (Interactive Investor) - iii.co.uk.

 

[megamuel]

Mike, sounds like we're in exactly the same boat! Both tried out a few (a few dozen maybe!) techniques, neither found one we are confident trading with yet, and both taking a break while we learn some more! You said in your other post about it taking about 2-5 years to become a decent trader, well I'm about a year into my apprenticeship, although about 6 months of that I was studying completely the wrong stuff - indicators! How long have you been at it? About the book - Integrated Pitchfork Analysis, don't buy it yet. Once I'm done I'll post some trades on my journal and then you can see what you thnk!

I like MT4, I like its charting, but I haven't been trading forex, I have been trading stocks and I use Sharescope for that. However, I only have the GOLD edition of Sharescope which has end of day data, if you want intraday stuff it costs a lot more. I have demo'd the upgrades but I don't really like them. With MT4 you can draw something on the larger timeframe, then move down a timeframe and your lines will be there. On Sharescope the different time frames are in different windows. I want something like MT4 but for stocks. Anyone got any suggestions?

By the way, I am with Interactive Investor and I don't really rate them... However - They are the only broker I have had so I have nothing to compare them to. Its just that things always seem to mess up when its most critical. Re-quotes and stuff. Sometimes the price shoots up in your favour and you try to close your position and it just sayd "Indicative" and won't let you close. Plus sometimes in the past when I've had problems, I've sent them an email, only to recieve a automated response saying how busy they are and a member of staff will deal with my query soon, and I never hear anything back. I think I want to go with Futuresbetting. I've heard lots of good stuff about them, they also promise no re-quotes.

Anyway, good look with TD's stuff, he certainly has a lot of admirers so there must be something in it. I did start reading one of his famous thread a while back, but it was such a mish mash with everyone elses posts clogging it up I got completely lost. I think it helps if your follwing those threads in real time as they are being written, not trying to catch up with it once its finished. You can guarantee that only a very small % of the threads are TD's gems, and th majority is everyone elses bullsh1t. Would be good if all his posts were extracted and made into a book! Shall we do it and sell it? LOL - Joke :innocent:

Anyway, good luck with it all fellow apprentice trader. 👍

Sam.

Sam,

"Hate losing money" is fine I think; keep that attitude and you may beat the pants off half of us at this game before many years. Take some losing trades, sure, but keep them small; but I'm sure you've read that many times.

MT4 is pretty cool.

I'll check out the "Stephen Hawking of the TA world" one of these days 🙂

Currently not actively trading for the reasons I mentioned, although I've just opened a new SB account with IIS (after the information about their "free money" offer was mentioned on here, and will use their "trading academy" to trade small stakes for a while. Trouble is those low-stake opportunities usually don't last very long (not actually verified this one), so you have to make hay while the sun shines.

I'm currently studying and re-studying Trader_Dante's method, and that's going to be my main approach for a good while I think. I did look at it briefly when I first signed up here last year, but I didn't follow it through properly then; wish I had done 🙂 Of course, it's not the only way to make money (as he himself says). There is lots of good information and great people on this forum. Takes a while to fully appreciate it all. I will also try to incorporate some lessons from Marcel Link as well, I think, although he is more indicator-based. However, I imagine he would not disagree with any of TD's approach to chart analysis.

I've slowly realised I can't get rich quickly 🙂 so I'm now in for the long haul.

I initially started inspired by Mark Shipman's book about commodity trading. However, this was in a highly trending market, and you barely needed any serious TA in order to profit. Times change 🙂
More recently, I've been inspired by Barry Burns and his "Top Dog Trader" stuff (bought some of it). Lot of good stuff in that I think, but I'm not sure I was using it right; didn't always work for me, anyway. Anyway, I decided to look elsewhere, and that's when I realised what a jewel TD's stuff was.
I may ending up finding that doesn't work for me either; it's not the system, but the person trading it. You've probably read that a few times also 🙂

 

[megamuel]

Hey Ross, Hows it going?

You're right - trading and inevitably losing is the best way to learn, its just without a solid plan and enough knowledge I was just needlessly giving my money away. I'd have been better off writing a cheque to a charity or even you! Anyway, I traded and learnt that I was crap and needed to go away, learn some skills and get a plan! But I have a week off soon and I'm gonna go for it and make some trades and see how I go.

Thanks for the book recommendation - another one to add to the reading list! Yeah I have "about £2k" in there. Its kinda dipped a bit 😱 😡 but not too much and I can already trade pretty small with Interactive Investor so that shouldn't be a problem. Keep an eye on the journal there should be some updates in the next few weeks 😉

You and your friend still moving down to Chester? Hope your trading is going well,

Sam.

HI Sam, regarding your comment above, I don’t think there is any way to learn to trade without losing money. I understand where you are coming from and think it wise that you are not just jumping into the market every day without a plan. However a trading edge can only come from experience. And the experience comes through trading.

If I were you I would read 'trading in the zone', it’s a fantastic book and a must read. There are loads of methods out there to be used. Now I’m not saying that any method works or doesn’t work (I feel that the trader makes the method work and not the other way around) but a half decent strat should keep you around breakeven if you stick to it long enough, and this will give you some valuable experience that no book can teach you!

I seem to remember that you have about £2K in your SB account? Can you not ask the SB company to let you trade at 10-50p per point? That way in the worst case scenario you could lose 2000 points in a row (which is so unlikely) and still have halve your account. Loses are fine, they are as much a part of trading as profits, as long as you learn something from them. You have to be in the market to find out what you like doing and what you don’t like doing.

I’m sure you have already thought of this as you seem switched on but maybe it can be of some help?

Rossini

 

[megamuel]

Oh and thanks for everyones opinions on why people write trading books. I guess I just wanted reassurance that I wasn't just being ripped off by people who couldn't trade...

Sam.

 

[montmorencyt2w]

Sam,

About the same time as you I think! ... early 2008 anyway; can't remember the exact month.

Well, I've only joined III for the "free" money and a chance to trade penny stakes for a while.
CS have similar problems with delays, etc. IG is a much better platform but larger spreads and some other restrictions that can be tiresome (at least on a limited risk account).

Agree with you that reading TD's MMT would have been better in real time, and it's a tough read now. ("James 16 Chart Thread" over at FF is even tougher!). Worth it though, I'm sure. There was supposed to be going to be a .doc or .pdf version of that thread (or the most important parts), but I have a feeling it never materialised. I've been going through it extracting TD's posts, and also trying to summarise the main features in my own words, but there's a long way to go. Essentially though, as far as I can see, the essence of TD's method is to just be able to read the chart and let it tell you a story, let it tell you the most likely places it's going to turn, and then you trade the most likely ones; if there is any doubt at all, don't trade it. Thus you (hopefully) keep losses small and winnings high. But I think it takes years of hard work to get to that stage; I think TD said it took him 7 years to become a good trader, even more than Marcel Link's 2-5 years! 🙂 So you/we have to survive in this game for another 6 years at least, before we arrive on Easy Street 🙂

Good luck!

 

[megamuel]

I'll have run out of money by then! Lol Good luck to you too!

Sam.

 

[montmorencyt2w]

Sam,

If you want a break from reading about trading per se, two very interesting books by Nassim Nicholas Taleb are "Fooled by Randomness" and "The Black Swan". Taleb came to some prominence because he appeared to forecast the credit crunch. He didn't really, but his book(s) were incredibly well-timed. He just predicted that something like the crunch was bound to happen sooner or later, but, as he is a clever sort of guy, he puts it much better than I have 🙂 Actually, I think he is the Lebanon's answer to Stephen Fry (whom, you may recall, Hugh Laurie described as having "a mind the size of Kent" - well, a bit like that, but without so many jokes). His mate Benoit Mandelbrot wrote (among other things) "The Misbehaviour of Markets".

None of these will help you trade, but as well as being interesting, they may serve to remind just how risky and uncertain it all is.

I think Mandelbrot thought he was almost on the verge of a sort of grand unifying theory of everything (like physicists are always looking for) which, if perfected, really would allow you to find out how markets really work, possibly to the point of really predicting them. I believe he's quite old now, so whether he will complete this magnum opus before the grim reaper strikes....

 

[montmorencyt2w]

Sam,

Pitchforks again ... reading around, I have realised that they are the same really as Andrews Median Lines, which I also hadn't heard of until recently, until "Nine" posted some links to some articles by Tim Morge. More here:

Tim Morge

As far as I have read so far, I'd say that Tim Morge's approach is fairly consistent with TD's, with the addition of the median lines (which TD may do anyway, perhaps in a slightly different way; just guessing).

 

[megamuel]

Hey Mike,

Cheers for the link. Yeah median line studies and Andrew's Pitchfork are all the same thing. I've heard of Tim Morge before but hadn't seen that webpage, I'll check it out, cheers. Did you have a read? What did you think?

Sam.

P.S. I already started reading Black Swan a while back but found it a bit too deep for my simple mind! I might pick it up again though after I've finished me riveting Pitchfork Analysis book! Lol...